Getting your own home is no mean feat. A deposit is the main initial cost you’ll need to account for and typically starts at 5% of a property’s value. Even with the UK house price boom appearing to slow based on recent ONS data analysis, today’s average buyer still needs to save up significantly more than previous generations did.
While pay growth continues to be outstripped by inflation, your goal might feel forever out of reach. But with the right knowledge, planning and perseverance, there are ways you could save up a deposit and buy your own home sooner.
Below, read five practical tips for making your dream feel more achievable.
Calculate what you need
The first logical step is to calculate how much you need to save. You can find this out by researching your realistic budget and what properties are going for in the area(s) you want to buy in. There are various free online calculators that can help you with the first part.
Keep in mind that while many mortgage lenders accept 5% deposits, putting a larger deposit down can help you get a better deal and pay less back in interest overall.
Reduce your outgoings
Reducing bills can be easier said than done in the current economic climate. But shopping around for cheaper utilities, as well as broadband and mobile phone deals, can still make a big difference.
Similarly, look for areas you can reduce your regular spending. You could cancel unused TV or gym subscriptions, for example, and start buying fewer meals and drinks out. It all adds up month on month!
Save in the right places
If you really want your savings to grow, it makes sense to keep them in a separate savings account to accumulate interest. Make sure to research your options as there are various savings account types available, each offering different features and benefits.
Lifetime ISAs make savings tax-free and can even earn you a government bonusIncome received as a bonus, which may affect a borrower's ab... of up to 25% when buying a first home. Regular savings accounts come with different levels of access, meanwhile.
Assess your current living situation
For a more drastic solution, it could pay to reassess your living situation in the short term. Rent is likely to be the largest regular cost you’re facing, so switching to a cheaper setup could build your deposit much faster. Your options could include:
- Moving back in with parents temporarily
- Moving to a cheaper area or smaller space
- Moving into a flatshare or getting a lodger
Increase your income
Another option which may or may not work for you when saving for a home is increasing your income. Depending on your skills, you may be able to:
- Take on freelance work alongside your regular job
- Pick up extra shifts or do overtime
- Go for a promotion or move to a higher paying job
- Set up a side hustle to sell products online
Another option is to sell any valuable possessions you no longer want or use, such as old clothes or technology.
Could any of these tips help bring your move-in date closer?
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